EVOLVING CYBER RISK & UNSOLVED PROBLEMSadalyajournal.com/gallery/80-nov-2326.pdf · These threats affect not just Individuals but also corporates, governments, and society as well

EVOLVING CYBER RISK & UNSOLVED PROBLEMS

(A STUDY ON CYBER SECURITY AWARENESS & A SPECIFIC

STUDY ON PROVIDING SOLUTIONS TO CYBER RISKS & ENABLE

WITH CYBER LIABILITY INSURANCE)

ABSTRACT

With the dynamics in technology evolving in today’s world, cyber risks and breaches in legal,

regulatory, compliance environment, etc., which constitute the major threats in our daily lives.

These threats affect not just Individuals but also corporates, governments, and society as well.

Cyber security is the body of technologies, processes, and practices designed to protect

networks, devices, and data from attack, damage, or unauthorized access. The bank robbery

that took place in Bangladesh in 2016 majorly damaged the reputation of the Bangladesh Bank

when security hackers illegally transferred close to the US $1 billion from the Federal Reserve

Bank of New York issued the thirty-five fraudulent instructions. Such huge cyber risks exploit

human weaknesses rather than the computer itself. Since such risks are growing at a rapid rate,

Cyber Liability Insurance becomes the key tool to protect the stakeholders from such

uncertainties. Cyber Liability Insurance is an Insurance policy that covers the financial losses

arising out of data breaches, which would affect the individuals, organizations, government

and the economy as a whole.

According to the survey conducted in the year 2018 by Federation of Indian Chambers of

Commerce & Industry (FICCI), Cyber insecurity remains Achilles' heel threat. Information &

Cyber Insecurity continues to pose a serious threat to the current shift that our nation is

undergoing towards the digitization of various assets. Data theft, Phishing, and Hacktivism

have emerged as the biggest threat under this risk category according to India risk survey 2018.

This paper will focus on deeper understanding of cyber risks primarily related to individual

and organizational threats and promote ideas & solutions regarding the respective risks and

prioritizing cyber risk management. Even as we are moving, steady fastly towards

digitalization and embrace technological development for user-friendly initiatives.

Keywords – Cyber Security, Cyber Liability Insurance, Risks, Risk Management,

Digitalization, Technological Processes, User friendly

ADALYA JOURNAL

Volome 8, Issue 11, November 2019 878

ISSN NO: 1301-2746

http://adalyajournal.com/

EVOLVING CYBER RISK & UNSOLVED PROBLEMS

(A STUDY ON CYBER SECURITY AWARENESS & A SPECIFIC

STUDY ON PROVIDING SOLUTIONS TO CYBER RISKS & ENABLE

WITH CYBER LIABILITY INSURANCE)

INTRODUCTION

Cyber-attacks effectuated for financial gain through crimes like fraud, ransomware or

extortion. There are many instances where obstruct, revenge or recrimination are factors.

These Cyber-attacks also have a political aspect and were reportedly used in cyber-warfare.

The cyber-attack is not only focused on any particular industry but it is widely spread across

industries including individuals, organizations, government, etc., which are online and

technology connected through digital platforms. The Insurance Industry started addressing

the need of protecting cyber risks and ensure cyber security by way of protection and

formulate the tailor made and adaptable cyber insurance plans for different segments of

industries and Cyber risks profiling according to the sector specification and threats posed

and evaluate adequate risk management measures as a part of cyber security and combat with

challenges faced through cyber insecurity

Cyber-attacks not only originates outside organizations. “According to white hat Dark Web

professionals at Black Hat 2018, it cited that many hackers are certified professionals who

operate as trusted time bombs and have already penetrated most organizations.

A cyber-attack is a strike launched by cybercriminals using one or more computers against a

single or multiple computers or networks. A cyber-attack can maliciously disable or block

computers, steal data, or use a breached computer as a launch point for other attacks and

extended unethical practices. Cybercriminals use multifarious methods, including malware,

phishing, ransomware & cyber extortion, denial of service, emailing spoofing, IT thefts, Data

Breaches among other methods. The amount of data being generated, transmitted and stored

on to various digital platforms and devices is skyrocketing at the exponential growth rate and

thereby ensuring to gear up with cyber security by ensuring comprehensive insurance cover

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to pay for losses that could arise if the cyber risks are subjected to cyber-attacks. The critical

nature of complexity of digital and IT systems and Data protection which supports

transmission and utilization pooled with the possibility of remote and anonymous and

unauthorized access which have posed various threats for cyber security and which are

exposed to immeasurable cyber risks which may hamper the financial as well as reputation

status and thereby growing risks of liabilities

REVIEW OF LITERATURE

According to Jean Bolot, Marc Lelarge in their research paper “Cyber Insurance as an

Incentive for Internet Security” addresses on considering the problems of cyber security

whether to buy Insurance to protect the Internet and its users from cyber security risks and

identifying the special benefits of Insurance and designing appropriate Insurance policies

According to Scott J.Shackelford in his research “Should your firm invest in cyber risk

Insurance?” speaks about firms been turning towards cyber risks insurance in order to better

manage cyber threats which result in legal liability from data breaches. The extent to which

cyber risk Insurance helps in mitigating cyber threats. It also emphasis on firms to enhance

overall having a better risk management policy in cyber security and help secure critical

infrastructures

According to Jagendra Kumar in his detailed article “Three Fourth Indian Business hit by

Cyber Attacks” states India, accelerating towards 5 Trillion dollars digital economy building

the right framework for cyber resilience and security is critical for our country. India’s fast-

growing affinity towards technology and its services, it is important that the country’s

businesses take more active steps towards cyber security

According to Jaswanth Singh G in his detailed article “Cyber risks and How can an

effective Cyber Insurance can be explored for mitigate risks” suggests about costs and

adverse effects caused by cyber risks, micro and macro perspective of cyber risk

management, Cyber Insurance market, and pricing of cyber Insurance and challenges, Design

and develop new adequate cyber insurance products/policies and provide for customization as

per the changing risks requirement

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According to Derek Young, Juan Lopez Jr, Mason-Rice, Benjamin Ramsey, Robert

McTasney in their research paper “A framework for incorporating insurance in critical

infrastructure cyber risk strategies” suggests the framework which incorporates the

operating principles of Insurance industry to provide quantitative estimates of cyber risks and

optimization techniques to suggests levels of investment in cyber security and insurance for

critical infrastructure owners and operators.

STATEMENT OF THE PROBLEM

The top concern for every organization or an institution is to achieve the ideal digital,

digitized and digitization environment for their automation, processing, customer relationship

management and efficiency in performance and growth. Unfortunately, this form of

convenience has become one of the biggest and concerning threats due to cyber risks and

breaches.

SCOPE OF THE STUDY

Cybercrimes impact everyone on a large scale it has a very deep impact on the businesses,

government, individuals and economy of a country. Evolving cybercrimes has a bad impact on

social media as well. These cybercrimes in the business sector can lead to exposing important

business strategies and many other activities, which leads them towards the loss of a company.

This may lead to shutting down the company. Cybercrimes in the government part may also

give a bad impact on a country, changing in the data, extracting government funds,

manipulating information, etc. all these cybercrimes give a serious stroke to the economy.

Coming to individuals’ cybercrimes is frequently happening on a large scale, misleading e-

transactions, hacking into bank accounts, taking money from an individual’s bank accounts,

etc. are the cybercrimes faced by the individuals this will have a very sad and pathetic impact

on the country. Social media also is the most common place where there will be a greater

number of cyber-attacks, hacking into other accounts, posting abusive things from others

accounts, posting things, which are hurting other religions/community, etc., are the common

cyber-attacks we see in social media. Social media is the most used platform cyber-attacks in

this area had a large impact on the country.

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OBJECTIVES OF THE STUDY

➢ To know the importance of cyber security

➢ To equip with cyber risks and solutions for cyber security by way of cyber liability

insurance

➢ To ensure commensurate risk management programmes for entities thriving on digital

era and adapting in digital environment

➢ To know the impact of cyber risk causing financial burden and emerging liabilities

LIMITATIONS OF THE STUDY

➢ The study is done based available secondary data

➢ Time is one of the major constraints.

SOLUTION ANALYSIS AND INTERPRETATION

‘Digital’ refers to the storage of data in the form of digital signals whereas ‘Digitize’ is the

process in which forms of representation are converted into a digital form. The widely used

term ‘Digitalization’ describes the transformation of simple analogs for digital interpretation.

It was developed for convenience and ethical usage.

According to a survey by Advisen Cyber Security, 95% of respondents are expected to face

business interruption due to cyber breaches. Aadhaar, India’s central biometric initiative had

been recognized for data breach exposing personal data. Demonetization, discounts on

mobile wallets, UPI transactions and funding from domestic and international stakeholders

led to digital transactions and payments to grow at a rapid rate. Various innovative apps or

digital wallets like Paytm, Google pay provide the customers with a wider choice of payment

systems and ease to switch among the apps.

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In Karnataka, cybercrimes have risen 5 times in 4 years. The number of cybercrime cases has

already reached 3,496. To safeguard personal and official data, it becomes very essential to

be aware and come up with robust solutions to cope up with the corrupted digitalized system.

According to the study conducted by Chennai- based cyber security names K7 Computing

Indian netizens are under regular cyber-attacks with almost 1 in 3 users in a country

confronting cyber-attacks in Quarter 1 of current fiscal 2019-2020. Tamilnadu state has been

regarded as the most vulnerable city in the country, which experienced cyber-attacks.

According to their report among metros, Chennai has recorded the highest percentile of

cyber-attacks with 48 percent from April 2019 – June 2019 followed by Kolkata with 41

percent during the same period, Mumbai with 30 percent and Delhi being registered with the

lowest percentile of cyber-attacks with 28 percent among the metros. Among the Tier I Cities

Bengaluru and Hyderabad is with 39 percent, Ahmedabad with 38 percent and Pune with 35

percent and overall the report cautions and alarms, the concerned stakeholders to leverage

specific intelligence for counter measures and threat hunting

As per the report, cyber risk exposure gradually rises on working days in Metros, starting

from Monday, and records the highest on Friday. In terms of timings of the day, the cyber

risk is highest during 4 PM and the safest is around 6 AM hour in the metros. The average

percentage of cyber-attacks in the top dozen infected Tier II Cities in India was found to be

worse when compared to Metros and Tier I Cities. From April 2019 to June 2019, Patna

experienced the highest percentile of cyber-attacks with 48 percent, closely followed next by

Guwahati with 46 percent, then Lucknow with 45 percent while Thiruvananthapuram stood

safest among all other cities at 35 percent

The enervating rise of ransomware attacks is a constantly growing problem in the digital era.

After the arrival of Ransomware-as-a-Service (RaaS), ransomware attacks have to scale up at

an alarming rate. Primarily hoaxing by email, fake websites, plugins, fake and identical

replication of applications (Apps) and malicious advertising and unauthorized links and

access, and by using the network and server-side vulnerabilities. This massive attack proves

that ransomware is still rampant.

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World Overview - Digital Snapshot

With the rise in every digital transaction individuals, organizations, government, etc.,

adopting online platforms every internet minute sees a lot of internet traffic on increasing

frequencies, below a trend of 2019 which depicts every internet minute what happens in the

online platform and it is set to rise in the near future

With each click, share, swipe and like, content and information are created. From Google to

WhatsApp to Facebook to Netflix, all use multiple platforms exposing personal information

and creating digital havoc. Messaging (Texts Sent from various organizations and services)

which is a large part of the internet and digital activity in 60 seconds. WhatsApp and

Instagram are emerging applications with the largest shares in the digital activity per minute.

Video Streaming and shopping online have majorly contributed through platforms like

Netflix, Amazon, Flipkart, etc. These websites and social media are created for customer

convenience but highly are used for data extraction and exploitation by looking at recent

cyber and personal crimes. In every 60 seconds18.1 Million Texts are being sent in

WhatsApp, 4.5 Millions of Video viewed on YouTube, 390030 apps downloaded from

Google Play Store & Apple App Store. 87500 People tweeting on twitter, 188 Million Mails

being sent, 3.8 Million Search queries on Google Chrome, 1 Million Logging in Facebook,

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etc.,

World's Internet Activity every 60 seconds-2019(in millions)

Google(search Queries

Facebook(logging in)

Messaging(Text sent)

Youtube(video'sviewed

google play store(appsdownloaded

Instagram(scrollinginstagram feed)

Twitter(peopletweeting

Tinder(swipes)

Email(mails sent)

Twitch(views)

Music apps(streamingand subscription)

Amazon/googlehome(speakersshipped)Giphy(GIFs served

Whatsapp/facebook(Messagessent)Snapchat(snapscreated)

shoppingamazon(spent online)

Netflix(hours watched)

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66%

58%

45%

45%

Penetration of Digitalization around the world-April 2019( in %)

Unique Mobile users

Internet users

Active social Media users

Mobile social media users

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Global Digital snapshot April 2019 - Key statistical indicators for the world's Internet, Mobile

and Media Users. Penetration of digitization using active social media and mobile social media

contributes 45% of the entire global population.

According to joint report of KPMG in India & Indian Mobile Congress – COAI released on

the first day of IMC 2019 (14th October to 16th October 2019) on emphasized on organizations

need to be open with consumers about their data being collected as cybercrimes are rising up

where India faces one of the highest rates of cyber security in the Asia Pacific region –

receiving more than 500,000 security alerts daily basis which is nearly more than the global

average. The impact of a data breach to an organization averaged $3.9 Million globally in 2018

and compared its previous year 2017 it stood at $ 1.83 million, which is approximately 216.67

percent of the increase in data breaches. The report also stated that nearly 39% of the security

alerts remain unattended owing to the lack of relevant skill sets and competency to deal with

such cyber risks. India has only 10- 12% digitally skilled employees having cyber security

skills and only a few of them have data protection and privacy skills and competency to deal

with such risks. The report highlights on India being speeding up its mission to transform into

a truly digital economy, the cyber security threats and privacy concerns could disrupt its digital

success. Equipping with commensurate risk management policy by ensuring Cyber Liability

Insurance in place to mitigate the risks arising out of increasing cyber-attacks and hampering

the credibility and causing financial burden and risks. Cyber threats superintend highlights the

ever-advancing threat landscape around the country and addresses the growing essential

requirement of digital risk management by being more proactive in the approach towards

cybersecurity and equipping with the need-based cyber liability insurance covers to mitigate

the financial burden and have additional protection floor for cyber risks All Industries together

along with the Government need to have a collaborative outlook to address the emerging threat

of information and cyber insecurity. The cyber-attack is not focused on any particular industry,

but it is widely spread across industries especially those organizations, which are online,

connected and exploring through the digital platform. The Insurance Industry can address the

need for protecting cyber risks and formulate the tailor-made cyber insurance plans for different

segments of industries and Cyber risks according to the sector specification. Cyber Insurance

covers the legal and other expenses in case of data breach and damages caused by the cyber

risks such as cost of restoring the data, loss because of the business interruption caused by

Cyber risks and Cyberattacks. Cyber Liability Insurance coverage can be formulated to meet

the cyber security risks and protecting the needs of various businesses of different sizes and

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providing Insurance Solutions on comprehensive data security and Other Related Cyber Risks.

In the wake of recent cyber-attacks and also implement an appropriate mechanism to mitigate

cyber risks The Insurance Regulatory and Development Authority of India (IRDAI) has asked

insurers on the present status and the future plan of action on cyber security framework of

insurers. IRDAI should also insist on research and exploring new product development of cyber

risks related to insurance products to combat growing cyber risks.

KEY FINDINGS

1. The Most popular Infection vector is Email/Phishing

2. Top cyber-attack industry targets: Banking and Financial Services Industry (BFSI),

Fast Moving Consumer Goods (FMCG) Industry, Food Industry, Logistics

industry, and Non-profit organizations.

3. Cyber Security and risk arising out Cyber-attacks may result in emerging liabilities

where the Individuals, Organization and government credibility will impact causing

a financial burden

4. With the right tailor-made Cyber Liability Insurance, one can get an inclusive mix

of defensive, as well as protective measures, covers inbuilt in such cyber risks

insurance products.

5. With the ever increase in the digital environment the probability of new emerging

risks can be secured by way of Insurance protection with apt Cyber Insurance

coverage.

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SUGGESTIONS AND RECOMMENDATIONS:

1. Maintain security hygiene, Choose prevention over detection to create

awareness on potential cyber risks and protection through adequate Cyber Liability

Insurance cover

2. Effective Cyber defense program as a part of risk management by building a

robust cyber security architecture that is multilayered and spans all networks, endpoints

and mobile devices, and cloud. With the right architecture and vigilant authorization

and access will tend to get better pricing of Cyber Liability Insurance Cover

3. In correlation to the growing use of banks’ mobile applications, malware

capable of stealing payment data, credentials and funds from victims’ bank accounts

have been pushed from the general threat landscape and became a very common mobile

threat too.

4. The Government should take a major action towards prank/fraud calls

5. The Insurers should incentivize those organizations, which shall have a regular

check on the proxy servers and take action by reporting to the concerned authorities

6. Income Tax authorities should have a check on the hackers who are more

towards the money laundering and tax evasion should ensure strict penal provisions and

Insurers should blacklist such hackers in providing any other form of Insurance cover

by way of imposing restrictions.

7. Creating awareness regarding cybercrimes, cyber risks and assistants from

Cyber Mitra to help them to ensure cyber safety and Cyber Mitra can help in locating

and choosing the appropriate cyber liability insurance and assisting in claims settlement

8. Adapting improved and user-friendly technology-related solutions and

implementing Blockchain technology by the insurance industry to keep a tab on any

subsequent changes or possible threats avoiding cyber risks.

9. Creating a Cyber Security community in clusters, which can impart basic cyber

risks training, and Insurance dynamics to protect with future cyber-attacks.

10. Ensuring consumer confidence in the certainty of cyber insurance coverage and

enhance efforts to increase awareness.

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11. Cyber insurance premium can be justified based on the layer of protection and

organizational data value at each stage of different functions of the organization

12. In addition to a financial loss mitigation tool, increasing burden of emerging

liabilities arising out of cyber risks The Cyber Liability Insurance awareness should

also help individuals understand how to prepare ahead of a potential cyber-attack

13. Having adequate Cyber security measures in place we should also be prepared

with potential threats causing cyber insecurity.

CONCLUSIONS

The foremost challenge to the insurance industry is the insatiable and ever-changing needs

and the constant change of attitude of the customers. New millennials are exceptionally quick

to experience insurance dynamics. Parallelly It is also required for Individuals,

Organizations; Government, etc., seriously to evaluate and examine various adoption of

digital platforms and innovative approaches of technologies, Drawing an effective risk

management policy to balance investment, risk and exploratory goals to identify appropriate

technologies and prepare with high-end cyber security measures. These risk evaluations can

streamline risk selection, improve decision-making, the increased expansion of vectors means

more ways to attack an organization. Drive better outcomes, and provide a platform for

developing innovative offerings that can increase market share and add more value to the

customers with trust environment by adding an appropriate Cyber Liability Insurance in their

Insurance Portfolio.

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REFERENCES

1) Jean Bolot, Marc Lelarge (2008, June) “Cyber Insurance as an Incentive for

Internet Security” WEIS The Workshop on the Economics of Information Security

Pages 1 to 8

2) Scott J.Shackelford (2012, July August) “Should your firm invest in cyber risk

Insurance?” Business Horizons Volume 55, Issue 4, July–August 2012, Pages 349-

356

3) Jagendra Kumar (2019, October) “Three Fourth Indian Business hit by Cyber

Attacks” The Insurance Times Pages 18 to 24 4) Jaswanth Singh G (2018 February) “Cyber risks and How can an effective

Cyber Insurance can be explored for mitigate risks” The Insurance Times Pages

23 to 28 and Blog : http://indiaassurance.in/single-post.php?ids=75

5) Derek Young, Juan Lopez Jr, Mason-Rice, Benjamin Ramsey, Robert

McTasney (2016, September ) “A framework for incorporating insurance in

critical infrastructure cyber risk strategies” International Journal of Critical

Infrastructure Protection Volume 14, September 2016, Pages 43-57

6) Jaswanth Singh G (2018 April) “Exploring cyber Insurance solutions for cyber

security or cyber insecurity and cyber risks” Pravartak April 18 Volume XII

Issue 1 Page 9 to 11 and Blog http://indiaassurance.in/single-post.php?ids=76

7) World Insuretech Report 2019 – Capgemini & Efma

8) https://news.k7computing.com/index.php/press-release/1-in-3-indian-netizens-are-

under-cyber-attacks-k7-computings-cyber-threat-monitor/

9) https://www.irdai.gov.in/ADMINCMS/cms/Uploadedfiles/07.04.2017-

Guidelines%20on%20Information%20and%20Cyber%20Security%20for%20insu

rers.pdf

10) World Economic Forum 2019 @lorislewis @officiallychad

11) Global Digital snapshot April 2019 – Key statistical indicators for the world’s

Internet, Mobile, and Media Users

12) https://government.economictimes.indiatimes.com/news/secure-india/india-

receives-5-lakh-cybersecurity-alerts-daily-kpmg-coai/71594476

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https://econinfosec.org/

http://indiaassurance.in/single-post.php?ids=75

https://www.sciencedirect.com/science/journal/18745482

https://www.sciencedirect.com/science/journal/18745482

https://www.sciencedirect.com/science/journal/18745482/14/supp/C

http://indiaassurance.in/single-post.php?ids=76

https://news.k7computing.com/index.php/press-release/1-in-3-indian-netizens-are-under-cyber-attacks-k7-computings-cyber-threat-monitor/

https://news.k7computing.com/index.php/press-release/1-in-3-indian-netizens-are-under-cyber-attacks-k7-computings-cyber-threat-monitor/

https://www.irdai.gov.in/ADMINCMS/cms/Uploadedfiles/07.04.2017-Guidelines%20on%20Information%20and%20Cyber%20Security%20for%20insurers.pdf



https://government.economictimes.indiatimes.com/news/secure-india/india-receives-5-lakh-cybersecurity-alerts-daily-kpmg-coai/71594476

https://government.economictimes.indiatimes.com/news/secure-india/india-receives-5-lakh-cybersecurity-alerts-daily-kpmg-coai/71594476

FIRST AUTHOR: JASWANTH SINGH G

[email protected]

Insurance Domain Consultant (InsureTech) Faculty for Insurance, Financial Services and Pension

Studies

SECOND AUTHOR : VARSHINI S

[email protected]

II B.COM PROFESSIONAL ‘B’ CHRIST (Deemed To Be University)

Registration Number: 1812665

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mailto:[email protected]


THIRD AUTHOR : PATHURI V M S K CHAITANYA

[email protected]

II B.COM PROFESSIONAL ‘B’ CHRIST (Deemed To Be University)

Registration Number: 1812619

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Documents

EVOLVING CYBER RISK & UNSOLVED PROBLEMSadalyajournal.com/gallery/80-nov-2326.pdf · These threats affect not just Individuals but also corporates, governments, and society as well